RC116 JanFeb 2025 - Magazine - Page 42
CLOSING SHOT
P3S OFFER A PROVEN
PATH FORWARD
by Derron Bain
ANADA’S INFRASTRUCTURE needs have reached
a critical point. Bridges, hospitals, schools
and transit systems are aging, while a
rapidly increasing population drives the
demand for both new and renewed public infrastructure. Governments face the
dual challenge of maintaining existing assets and
delivering new projects—all while grappling with
budget constraints, in昀氀ation and labour shortages. Without long-term cost-e昀昀ective solutions
that consider the whole life infrastructure, the
gap between infrastructure needs and available
funding will only widen, resulting in deteriorating
infrastructure, over-budget projects and delays in
future development.
In traditional infrastructure procurement
models, governments directly fund, manage and
deliver projects. These projects are prone to cost overruns, delays
and fragmented oversight, with contractors working in silos. In
British Columbia, the redevelopment of Richmond Hospital, initially
budgeted at $860 million, is now projected to cost nearly $2 billion.
Similarly, the Cowichan District Hospital, originally budgeted at
$350 million, has seen costs balloon to more than $1.4 billion.
Ine昀케ciencies in traditional procurement models are not isolated.
HKA’s Fifth Annual CRUX Insight Report analyzed 1,600 capital projects across the globe, highlighting reoccurring patterns of
cost-overruns and risks rooted in poor design, shifting project scopes
and inadequate planning. The staggering results point to the need for
more e昀昀ective procurement models that can mitigate 昀椀nancial risks
and ensure long-term value.
The model already exists. For over 30 years, public-private partnerships (P3s) have provided a successful alternative for infrastructure
delivery. Private partners invest their own capital, ensuring they have
a vested interest in the project’s success, leading to better management,
with projects delivered on time and on budget. Additionally, by leveraging private investment, governments can undertake more projects
without overburdening taxpayers or depleting public resources.
Deferred maintenance presents a signi昀椀cant challenge in traditional models that often overlook ongoing upkeep and lifecycle renewal.
As with your home, neglecting routine maintenance today only
leads to expensive renovations later. Manitoba’s schools face critical
repairs—like failing boilers and leaking roofs—demanding hundreds
of millions to ensure safe learning environments. Similarly, Ontario’s
underfunded schools and hospitals require costly upgrades, with
$229 million recently allocated for 129 hospitals and 58 health facilities—a steep price for deferred maintenance.
Derron Bain is the Chief
Executive Officer of
Concert Infrastructure.
42
RENEW CANADA – JANUARY/FEBRUARY 2025
Unlike traditional models, P3s integrate construction, operations
and maintenance into a single agreement, fostering collaboration
between the public and private sectors and accountability throughout
the project’s lifecycle, avoiding costly repairs in future.
Beyond funding, private partners contribute innovative technologies and best practices, raising the quality and sustainability of public
infrastructure. The public bene昀椀ts from cost-e昀昀ective and well-maintained infrastructure, and private partners contributing to long-term
community value.
P3s are already proving their value across Canada. In Alberta,
Concert Infrastructure recently partnered with Bird Construction, the
Government of Alberta and school districts to deliver 昀椀ve new high
schools under the P3 model. The Government of Alberta reported
that taxpayers saved over $114 million, and as Concert Infrastructure
is owned by 10 Canadian union and management pension plans, the
funding and development of these schools has, in turn, supported the
long-term 昀椀nancial future and pensions of over 200,000 hard-working
Canadians. Moreover, with long-term performance and maintenance
integrated from the start, the schools are designed to stay high-performing and cost-e昀케cient for decades to come.
One persistent misconception about P3s is that they equate to
privatization, fueling concerns from public sector unions that P3s
threaten public control. In actuality, P3-delivered infrastructure is never owned by the private partner, and at the end of a long-term lease or
licence, it is returned to the government in well-maintained condition.
P3s are partnerships, not sales, aligning public and private interests to
achieve shared goals.
Canada’s infrastructure future depends on adopting modern solutions that balance 昀椀scal responsibility with increasing demand. P3s
o昀昀er a proven path forward, aligning public and private interests to
deliver e昀케cient, well-maintained infrastructure. Governments must
act now to bridge the gap between budget constraints and public
demand—creating thriving, well-maintained communities across
Canada for generations to come.
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